"Today, I am directing my administration to make it possible to forgive 100% of the debt these countries owe to the United States ... when needed to help them finance basic human needs and when the money will be used to do so," he told world financial leaders.

The BBC's Patrick O'Connell: "This announcement does come with strings attached"

I don't believe we can possibly agree to the idea that these nations, which are so terribly poor, should always be that way."

Mr Clinton was speaking at the annual meeting of the International Monetary Fund (IMF) and World Bank in Washington.

Nicaragua could be among the first to benefit from the US offer

He said countries should not have to choose between paying debt interest and "investing in their children's health and education".

The BBC's Ed Crooks: ''Campaigners hope international bodies will follow the US example''

"Any country committed to reforming its economy, to educating and vaccinating its children, should be able to make those commitments and keep them," he added.

He said 1.3 billion people were surviving on less than $1 a day and 40 million people died of hunger every year.

Praise from Oxfam

The total debt owed to the US by the poorest countries is $6bn - just 3% of their total burden.

President Bill Clinton: ''I'm directing my administration....to forgive 100% of debts''

More than half the debts shouldered by countries like Mozambique are owed to international bodies like the IMF.

Campaigners hope they will now copy the American example.

Aid agency Oxfam was quick to welcome Mr Clinton's announcement.

Some 1.3 billion people live on less than $1 a day

"The new proposal will result in a significant increase in the amount of resources freed up in the poorest nations to be used to cut school fees, open health clinics and let these nations get back on the track of sustainable development," said Oxfam senior policy advisor Lydia Williams.

But she also urged the US administration not to cut aid budgets for development assistance.

International plan

Mr Clinton's offer follows a new agreement by the IMF and the World Bank to provide improved debt relief to around 40 of the world's poorest countries.

The BBC's Andrew Walker: ''The offer comes with conditions attached''

The Heavily Indebted Poor Countries (HIPC) initiative is aimed at cutting some $70bn off their $214bn debt burden.

Mr Clinton said he expects three-quarters of the eligible countries to receive some help by the end of the year 2000.

Mr Clinton has asked Congress for $1bn for debt relief

He said more than 430 million people could benefit from the programme.

Mr Clinton has already asked Congress for $1bn as the US contribution to the beefed up debt relief programme.

"We must all provide our fair share of funding for debt relief," he said.

Gold

About half the total debt is owed directly to individual governments - mainly Japan, the US, Britain, Canada, France, Germany and Italy - the G7 countries.

Most of the rest is owed to the World Bank and the IMF.